Gassing Up

Jan 04, 2007 (LBO) – Sri Lanka’s second cooking gas retailer raised prices by 17 percent Thursday on a formula approved by the consumer authority while the minister in charge said advance notice of price increases should not be given.

The Ceylon Petroleum Corporation has not raised prices since July. After fuel prices were fixed, Sri Lanka saw some of the highest inflation months in 2007.

Countries with automatic price pass throughs have inflation of around two percent a year.

Economic analysts say energy price increases seem to help lower inflation primarily because it dampens aggregate demand.

It also prevents a build up of economic imbalances which is then compensated by a change in the overall price structure of an economy. Laugfs Gas raised the price of a 12.5 kilogram domestic Liquid Petroleum Gas cylinder by 212.00 rupees to 1,460 rupees.

Shell Gas Lanka, the countries largest distributor raised prices by 175 rupees earlier in the week.

A Shell Gas cylinder is now priced at 1488 rupees.

Meanwhile Consumer Affairs minister Bandula Gunewardene said gas retailer should not announce price increases ahead as traders hide stocks to sell at the new price.

“When prices are announced in the med